Appeals Panel Overturns Mass. Division’s Rejection of Harvard Pilgrim’s Premium Increases

An appeals panel of the Massachusetts Division of Insurance overturned the division’s April 1 rejection of premium rate increases on small businesses and individuals sought by Harvard Pilgrim Health Care.

Harvard Pilgrim has shown its cost-containment programs, documented its cost savings and shown its programs are “adequate in organizational structure, commitment by senior staff, scale, effectiveness and responsiveness,” the agency decision said.

Harvard Pilgrim is pleased with the division’s presiding officers’ decision and looks forward to working with the administration to try to make health care affordable for its customers, said Sharon Torgerson, a spokeswoman for the nonprofit Harvard Pilgrim, in an e-mail.

In April, the state’s health insurers, including Harvard Pilgrim, sued the state over its rejection of the majority of proposed increases in small-group health insurance rates (BestWire, April 5, 2010). The division declared the proposed rates excessive and Insurance Commissioner Joseph Murphy used an emergency regulation to disapprove the filings (BestWire, April 5, 2010).

Some of the companies were asking for rate increases of 20%.

Jason Lefferts, a spokesman for the division, said in an e-mail that a statement from Barbara Anthony, undersecretary of the Office of Consumer Affairs and Business Regulation, represents the division’s position. Anthony had expressed disappointment with the decision.

By July 1, the division will make decisions on insurers’ rate filings for the third quarter that take effect on that day, Lefferts said.

Harvard Pilgrim “will be communicating with impacted customers soon regarding the impact on their premium rates and, in the meantime, they should continue to pay the amount invoiced,” Torgerson said.

Also suing the state were Blue Cross and Blue Shield of Massachusetts, Fallon Community Health Plan Inc., Health New England Inc., Neighborhood Health Plan and Tufts Associated Health Maintenance Organization Inc.

The suit remains, Lefferts said. In April, the judge ruled the carriers should exhaust their appeal avenues through the division’s hearing officers, and several appeals remain outstanding, he said.

Under Massachusetts’ 2006 health-reform law, the small group and individual markets were brought together into one merged market (BestWire, June 10, 2010).

“The ruling in Massachusetts shines a spotlight on the real driver of rising health insurance premiums: skyrocketing prices for medical services,” said Karen Ignagni, president and chief executive officer of industry trade group America’s Health Insurance Plans, in a statement.

Gov. Deval Patrick said in a statement that the “decision cannot stand.” He said small businesses and working people are being “victimized by out-of-control insurance premium hikes.”

Neighborhood Health recently settled with the state in the dispute, which created an overall “blended” base rate increase of 7.7% across all of its small group health plans (BestWire, June 10, 2010).

In May, the Massachusetts Senate approved legislation that would require hospitals and other health care providers with healthy profit margins to make a one-time, $100 million contribution to insurers to help bring relief to small businesses struggling to pay soaring premiums (BestWire, May 19, 2010).

Harvard Pilgrim Health Care Inc. currently has a Best’s Financial Strength Rating of B++ (Good).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)

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